Department of Labor’s Change of Stance On Mortgage-Loan Officers Upheld

In 1999 and 2001, the United States Department of Labor’s Wage and Hour Division issued letters opining that mortgage-loan officers do not qualify for the administrative exemption to overtime pay requirements under the Fair Labor Standards Act. In 2004, the Department issued new regulations regarding the administrative exemption that led to the Department issuing a new opinion letter in 2006 finding that mortgage-loan officers fell within the administrative exemption under the new 2004 regulations. In 2010, the Department again altered its interpretation of the administrative exemption and, once again, changed its stance with respect to whether mortgage-loan officers were exempt pursuant to the administrative exemption, this time finding they were not.

Unhappy with this turn of events, the Mortgage Bankers Association filed suit against the Department, claiming the Department’s 2010 opinion was invalid because it had been issued without following the public notice-and-comment procedures applicable to “legislative rules.” After the United States District Court for the District of Columbia ruled in favor of the Department, the United States Court of Appeals for the D.C. Circuit reversed. Certiorari was then granted and the United States Supreme Court took on this case. The Supreme Court determined that the Department acted properly, ruling that the opinion letter issued in this case amounted to an “interpretive rule” as opposed to a “legislative rule” and, as such, the public notice-and-comment procedures did not apply in this case.

But the ruling itself is not why I chose to mention this case in this blog. There is an important takeaway from this case for employees who work in the mortgage-loan industry. That takeaway is that the United States Department of Labor’s current stance is mortgage-loan officers are not covered by the administrative exemption to the FLSA. So what? Well this means mortgage-loan officers could very well be entitled to overtime wages for all hours worked in excess of forty (40) in a workweek. In light of the capitulating that has occurred on this issue and the fact that the Mortgage Bankers Association believed it was an important enough issue that they not only challenged the decision, but took it all the way to the Supreme Court, it stands to reason that many mortgage-loan officers may not have been properly paid overtime as required by the FLSA. So if you are a mortgage-loan officer who is paid a straight salary and/or not paid a premium for hours worked in excess of forty (40) in a workweek (including a premium on any commissions you have earned), you may have a claim for unpaid overtime wages and you should seek out legal counsel to discuss your rights.